an economics scrapbook

The face of the river, in time, became a wonderful book . . . which told its mind to me without reserve, delivering its most cherished secrets as clearly as if it had uttered them with a voice.
-- Mark Twain

Great news, everybody! The economy is growing again! I’m sure you’ve heard the sunny stories coming out of the media recently. Growth in the fourth quarter last year hit a 3 percent annualized rate. Unfortunately, a smaller share than ever of that growth is reaching American workers but at least it’s a start, right? Oh, and when we look a little deeper into the numbers we can also see that excluding inventory building the economy actually grew at a 1.1 percent rate, which is a sharp downturn from the previous period. But hey, I don’t want to rain on the parade. Now that the economy is… uh… growing, we need to take a hard look at the future of this growth. What really is the fuel for economic growth, anyway? Population growth. And, what fuels population growth? Oil. So, what happens to growth as the oil runs out?

The Paper Boat presents here the must-watch animated eye opener from Dermot O’Connor of Incubate Pictures, There’s No Tomorrow. It explains the arrival of peak energy and its important relationship to economic growth. It is about 30 minutes and provides a fantastic overview. “Peak energy” is just what it sounds like. The term refers to the moment in which we find we have used up half the world’s energy producing resources. Since the energy we use is largely generated by the consumption of oil and other petroleum products, the lifespan curve of oil acts as an indicator for the trajectory of energy use at large, as well as an indication of the state of remaining energy resources. Evidence shows peak production of accessible oil resources is upon us, while the rate at which we burn fossil fuels continues to accelerate exponentially. This video talks about the relationship between the end of cheap energy and the economic deterioration it threatens to cause. It is very important to think about how we can prepare for the effects of these dual crises ahead.